An Education Needs Assessment of CARIFORUM Firms

across different countries (Seric and Siong Tong 2019; OECD 2022). GVCs contributed to

productivity growth and job creation. They increased living standards, allowing governments to

leap-frog their development process by moving to higher-value-added tasks and embedding more

technology into their production processes (World Bank 2022). However, gains from GVC

participation are not automatic but depend on both firm-specific characteristics (high labour

productivity, large firm size, foreign ownership, and high technological capability) and country

related factors (openness to trade and foreign direct investment inflows, availability of educated

people, well-developed infrastructure, efficient logistics, and good governance) (Urata and Baek

2020; Raei, Ignatenko, and Mircheva 2019).

Of particular importance is the relationship between skills and participation in GVCs. Based on

the Heckscher-Ohlin model of international trade, which explains trade as differences in factor

endowments, skills are a critical component of a country’s comparative advantage in GVCs,

whereby a country whose workforce is more skilled than another can specialize in high-skilled

activities (Chor 2010; OECD 2017b). Consequently, beyond the population's education level,

countries are increasingly competing through the quality of skills and the effective use and efficient

allocation of skills to industries (OECD 2017b).

Regarding relevant skills for GVC participation, empirical research by Grundke et al. (2017) found

four key findings. Firstly, cognitive skills (literacy, numeracy and problem-solving) strongly relate

to labour productivity and GVC integration in all industries, regardless of industry-specific

characteristics. Secondly, task-based skills are more industry and occupation-specific, but ICT

skills, management and communication skills, and readiness to learn to show a significant positive correlation with productivity and forward integration 2 into GVCs for all industries. Thirdly, the specialisation of industries in specific tasks positively relates to productivity and forward integration into GVCs. Fourthly, with increasing servicification of GVCS 3 , services specializing

in marketing, accounting, management, and communication tasks show a higher forward

integration in GVCs than services that do not mainly specialize in those tasks.

2 Forward linkages capture the extent to which domestically produced goods and services are used in the production of foreign exports (Blyde and Trachtenberg 2020). 3 Servicification of GVCs refers to the increasing reliance of the manufacturing sector on services whether as inputs, as activities within firms, or as output sold bundled with goods (National Board of Trade 2016).

10